On December 26, 2024, the US Court of Appeals for the Fifth Circuit issued an order in Texas Top Cop Shop, Inc. et al. v. Garland et al., that effectively pauses beneficial ownership information (BOI) reporting requirements established by the Corporate Transparency Act (CTA).
To recap earlier developments in this case:
- December 3: A nationwide injunction against the CTA was issued by the U.S. District Court for the Eastern District of Texas.
- December 23: The Fifth Circuit Court of Appeals stayed the injunction, reinstating the CTA.
- December 26: The Fifth Circuit vacated its earlier stay, potentially reinstating the injunction.
The latest order from the Fifth Circuit vacates the stay that was issued on December 23, such that the BOI reporting requirements are again paused.
While the CTA’s reporting requirements are not currently in effect, the Texas Top Cop Shop litigation is ongoing. The government could seek further emergency relief from the Fifth Circuit or the US Supreme Court, which could result in resumption of the reporting requirements.
Given this uncertainty and the unpredictable path this litigation has taken to date, companies would be prudent to assess whether they are covered by these reporting requirements, and, if required, be prepared to file BOI reports with FinCEN. But for the injunction, the deadline for many companies to submit initial BOI reports would be January 13, 2025, and while FinCEN extended reporting deadlines following the December 23 decision as described above, it is not known whether FinCEN would do so again if the reporting requirements are again reinstated.
